How to record partial payment from customer due to vendor
Our company sells custom furniture items that are manufactured by a few different vendors. We require a 50% deposit on the invoice before construction begins. We also are required to pay a 50% deposit to our vendors.
Our PO to vendor: $200
Invoice to customer: $250
50% received from customer: $125
50% owed to vendor: $100
What is the correct way to record these deposits from customers? Many of these projects are complicated and can take 2-4 months to complete. I inherited the books in a very disorganized state and currently the deposits from customers are simply being recorded as AR but this is causing a lot of problems.